Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1887-05-12
THE U. P. INVESTIGATION.
Holmes, one of the Counsel for the T. P. Elk
amined.

Holmes, one OF the Counsel for the e. 2 Ey-
amined.
New York, May 9.-The Union Pacific
investigation committee resumed Its
duties to-day. Artemus Holmes, one OF
the counsel of the Union Pacific, was tie
witness. He related the manner of the
construction of the Union Pacific. There
were originally four roads; the Kansas
Pacific, Denver Pacific, Northern Pacific
and the Oregon railroad. In the fall of
1876 1.-the Kansas Pacific became one
of the combination of bondholders of
the Denver Pacific. Mr.. Holmes said the
total incumberances on the roads in 1877
wasa bonded debt of So, Isl, 600 and in
terest of S4,5S5,759. This cover
ed the whole road from Kansas
City to Denver. The stock
of the road was valued at about
100000 at the time. The government
lien was $6,3O4,OOO. The capital stock of
the Denver Pacific was about 100000.
A receiver was appointed for the Kansas
Pacific in 1876. From 1873 to 1916 the
Kansas Pacific was as low as So or So, and
the Denver Pacific 40, while others of
these securities named were practically
valueless, Beginning in 1877 a marked
and decided Improvement was noticed in
the business and prospects of the Union
peeife @hrougn the development of thc
country, which had been considered worth
less previous to that time. The mortgage
On the Denver extension was sued in
the foreclosure, and the time having ar
rived when the interests of the Union Pa
cific and the Kansas Pacific roads were
evidently Identical, the consolidation
was effected and the mortgage settled,
the Union Pacific assuming control. This
was In the spring of 1878. Holmes re-
lated how it was that in 1880, the 29,9S6
shares of the Denver and Pacific stock,
in the hands of Gould and Sage, the
trustees of the mortgage, was released.
Holmes was directed by Sidney Dillon to
draw complaint in the matter
and serve it on the trustees.
1t set forth the Denver and Pacific
otock had no market value and added
nothing to the value of securities held in
the hands of the trustees. The answer
virtually submitted the complaint to the
court and the stock was released on the
stipulation that other securities would
take its place. Ruggles was appointed ref
cree on Holmes suggestion, and Russell
Sage, secretary of the Kansas Pacific and
others were examined. RuggIes reported
Jan. 81, 1880. Holmes examined the
referees report and declared that it was
not the handwriting of Ruggles, but
could not say whose it was. The decree was
dated "a hours after the findings and the
stock was released. Holmes said he did
not know at this time the
articles of consolidation of the Union
and Kansas Pacific were in preparation,
though they bore date Jan. "a, the day
after that of the decree. Dillon did all
of the business of the consolidation and
Holmes knew nothing about it till after
wards. The Denver stock was transferred
to Gould, Sage and others and later, after
the consolidation, was exchanged for con-
solidated stock at par and the latter
stock was saleable at 100 cents on the
dollar. Mr.. Anderson asked why the
Denver stock which Dillon had sworn
Jan. II was of little or no value had not
been transferred to the Kansas
Pacific direct so that it would get
the benefit instead of going through
the hands of Gould, Sage, Atkins, Fred |
erik l.. Ames, Dexter. and their associates
on the Union Pacific, when the day after |
this decree was made the transfer was |
made, and it Immediately became of full
value. The witness explained that Gould
exchanged the Kansas Pacific bonds on
the cross country branches for this stock,
and then put it in for equal shares of the
consolidated stock after consolidation.
The value of the stock became 100000
Immediately, and the holders whose names
have been given drew eight per cent divi
derds on it up to 1885, when the Union
Pacific ceased paying dividends.